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V1636-20 27 May 2020 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del trabajo

Pension plan benefits are taxed as employment income in the year they become due

A taxpayer queried the taxation and timing of income derived from an occupational pension plan. The Directorate General for Taxes (DGT) clarified that these benefits are classified as employment income and are recorded when they become due, based on the date of receipt.

The question raised

Possibility of exercising the consolidated rights of the pension plan. Taxation and temporal allocation of the benefits received.

The DGT's ruling

Pension plan benefits are considered earned income and must be included in the general taxable base of Personal Income Tax (IRPF). Their temporal allocation is governed by the moment they become due to the recipient. In the case of immediate lump-sum payments, the due date coincides with the payment, unless the maximum period of 7 business days following the submission of documentation is exceeded, in which case it shall be allocated to the period in which said period expires.

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